Russia Stocks Snap Three-Day Drop on Ukraine Deal as MTS Climbs

Feb. 21 (Bloomberg) -- Russian stocks gained for the first
time in four days as Ukraine President Viktor Yanukovych signed
a deal with opposition leaders and an increase in a U.S.
manufacturing gauge signaled an improvement in global growth.

A council representing protesters backed Yanukovych’s call
to hold early presidential elections to end the standoff. The
crisis had threatened to push the country to the brink of a
civil war as authorities reported 77 protesters were killed and
369 hospitalized in violence that began Feb. 18. In the U.S. the
Markit Economics preliminary index of manufacturing rose
yesterday to 56.7 in February, surpassing economists’ estimates.

“The U.S. growth and stabilization of the situation in
Ukraine is helping us today,” Vadim Bit-Avragim, who helps
oversee about $4.2 billion at Kapital Asset Management LLP in
Moscow, said by e-mail. “The violence has stopped and that’s
stabilizing our market. If a final decision is made and talks
begin, our market will feel a relief. Gazprom is the most
sensitive to the Ukraine crisis; MTS doesn’t benefit from the
destabilization.”

Ukraine’s lawmakers reverted to the 2004 version of the
country’s constitution today as part of the peace pact between
the government and the opposition.

Ukraine Sanctions

In addition to MTS, which generated 15 percent of third-quarter net income in Ukraine, Gazprom, VimpelCom Ltd. and VTB
Group have direct exposure to Ukraine, Sberbank Investment
Research analysts said in an e-mailed note yesterday.

“Sentiment toward Russia remains dependent on the flow of
news coming from the neighboring Ukraine,” Slava Smolyaninov,
the chief strategist at UralSib Capital in Moscow, said in an e-mailed note.

The dollar-denominated RTS Index increased 1 percent to
1,315.54. The ruble has retreated 7.5 percent this year against
the dollar, the worst performance after Argentina’s peso among
24 developing countries tracked by Bloomberg.

The nation’s equities have the cheapest valuations among 21
developing countries monitored by Bloomberg, with shares on the
Micex trading at 5.4 times projected 12-month earnings, compared
with a multiple of 10.2 for the MSCI Emerging Markets Index.

“We had seen strong declines in the market earlier this
week and today stocks are rebounding,” Evgeny Loktyukhov, an
analyst at OAO Promsvyazbank in Moscow, said by phone. “U.S.
manufacturing is in a good shape, which makes investors
optimistic about growth.”